By Marc Jampole
The rearguard action against raising the minimum wage continues quietly in the opinion pages of our major newspapers, and it’s one of the reasons that progressives, liberals and centrists should vote party line Democratic this fall.
Simply put, the Democrats want to raise the minimum wage and the Republicans want to keep it at $7.25 an hour, far below the level at which anyone could support her/himself or a family.
The big Republican argument against the minimum wages is that it will cause companies that can’t afford the raises to let people go. For example, Peter D. Salins, a political science professor who takes money from the right-wing Manhattan Institute, estimates in a New York Times article titles “A Better Way to Raise Incomes” that raising the minimum wage to $15 could reduce the number of jobs nationally by three to five million. Keep in mind that Salins is not an economist, but a political scientist paid by people who would benefit by keeping the minimum wage down. At best, Salins is wrong; at worst, he’s a liar.
As the U.S. Department of Labor (DOL) points out in a short report exploding a bunch of what they call “myths” about the minimum wage (and what I call “lies”), advanced thinking by current economists minimizes the risk of greater unemployment when the minimum wage increases. Here is the exact quote from DOL: “In a letter to President Obama and congressional leaders urging a minimum wage increase, more than 600 economists, including 7 Nobel Prize winners wrote, ‘In recent years there have been important developments in the academic literature on the effect of increases in the minimum wage on employment, with the weight of evidence now showing that increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market. Research suggests that a minimum-wage increase could have a small stimulative effect on the economy as low-wage workers spend their additional earnings, raising demand and job growth, and providing some help on the jobs front.’"
In other words, current thinking by mainstream economists (i.e., those not employed by rightwing think tanks) is that raising the minimum wage does not lead to job losses. In fact, a higher minimum wage can stimulate job growth because the low-wage workers have more money to spend.
Like many Republicans, Salins declares that he feels great empathy for the plight of our lowest paid workers. That’s why he supports earned income tax credits (EITC) for the working poor. First enacted in 1975, EITC are payments made to qualifying workers based on their annual income tax returns. In his Times article, Salins launches an impassioned advocacy of the EITC program. What he likes most about it is that it’s based on need. As the income of a recipient goes up, he or she will get lower EITC payments from the federal government.
Instead of raising the minimum wage, Salins instead supports the Paul Ryan proposal to raise EITC payments and make more people eligible for the payments. He claims that growing the EITC program helps the working poor to improve their lives without the fear of job losses.
What he really wants to do is help corporate America rip billions of dollars off the American people and their own employees. To see why the EITC is a massive scam, let’s follow the money in two scenarios: 1) The minimum wage is raised; 2) The EITC is raised to produce the same amount of additional income for our working poor.
If the minimum wage is raised, employers will pay the additional amount to employees. If we enhance the EITC program instead, the money is also paid to employees, but it is not businesses that pay the additional amount, but the government paying it from everyone’s taxes. The employees get the same money, but the federal government is left with less money and employers are left with more. Imagine that instead of any EITC payments, the collective incomes of the working poor increased through salary bumps. Again, the working poor make the same, but the part paid by the government from taxes is now paid by employers. Keep in mind that the EITC is always a substitute for higher wages (minimum or not) since only someone who is working can get the payments. Thus, almost by definition, the EITC is not really a program that helps poor workers, but one that helps employers avoid having to pay a living wage. It’s really a form of corporate welfare masquerading as an anti-poverty program.
If Salins really cared for the working poor, he would advocate a higher minimum wage, which would not only pour money into the economy, but also save the federal government in EITC payments. Of course, like virtually everything else we need to do to get the economy growing again, raising the minimum wage would take money from the wealthy and upper middle class, who are the primary owners and operators of business. For about 35 years now, we have been robbing Peter to pay Paul, which in this case, means taking money from the poor and middle classes and giving it to the wealthy. We’ve been doing it in many ways, including lowering taxes on the wealthy, cutting back on government programs, making it harder for unions to operate, suppressing the minimum wage and privatizing basic government services to for-profit companies that pay their workers less and their bosses more.
When Peter Salins, Paul Ryan and other Republicans advocate keeping the minimum wage low and subsidizing corporations by giving payments to their impoverished workers, they really only have the interests of the wealthy at heart.
To raise the minimum wage is going to take a Democratic Congress and a Democratic President.